Wednesday, May 11, 2005

Vonage's Spending Plans

Mark Evans

Now that Vonage's US$200-million financing exercise is finally official, some interesting tidbits of information are starting to flow. According to CFO John Rego, Vonage plans to "easily" spend 90% of the money on advertising, which can only be good news for all those Web sites sporting Vonage banner ads these days. Despite the heavy focus on marketing, Rego expects the company will be profitable within the next 12 months as it adds more than 75,000 new customers a month. If VOIP IPOs hinge on profits, revenue and customers - a.k.a. traditional IPO benchmarks - maybe Vonage will not be doing a public offering this year. This would be a big disappointment to all those other VOIP companies hoping to ride on Vonage's coattails. As for why Vonage decided to do another private round rather than an IPO, the simple answer is: if investors are willing to give it to you, take it.
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